403(b) Plan Fee Disclosures

A Department of Labor regulation requires us to provide specific plan and investment information on an annual basis that includes detailed information about your investment options and expenses associated with those investments, to help you make more informed decisions about your investment options. Although no action is required by you at this time, please review these plan disclosures. This is also a good time to review your current fund allocation and make updates as necessary. When it comes to planning for retirement, plan fees should be considered when making investment decisions — just as you would consider how investment performance, your contribution amount, and asset allocation strategy all impact your retirement savings.

Generally, there are three types of costs involved with a workplace retirement savings plan:

General administrative services- These fees are paid to the vendor(s) you are enrolled with (TIAA-CREF, Fidelity, Vanguard, Conrad Siegel) for the services necessary for the day-to-day operation of a retirement savings plan. Services may include recordkeeping, accounting, legal services, website support, customer service and phone support, and ongoing participant communications. Please note that if you are with more than one vendor you may be paying multiple administrative fees. Our fund lineups are designed such that you should be able to create a personalized, balanced portfolio with any single vendor.

Personalized services - Personalized service fees apply to specific services that you request. These fees are typically charged directly to your account, if and when you use the service.

Specific investment expenses - Investment expenses typically represent the largest portion of a plan’s administrative cost, and you pay these fees only for the investments you actually use. These fees are not deducted directly from your account; they are paid indirectly through what is known as an “expense ratio.”

How are expense ratios calculated?

An expense ratio is the percentage of assets an investment provider charges each year in exchange for its services. It goes toward expenses to run the fund, accounting and legal fees, fund manager’s compensation, and advertising. For example, an expense ratio of 1.5% means that each year 1.5% of the fund’s total assets are used to cover these expenses. Expenses can vary among investment options due to factors such as the risks and complexities of the fund’s investment strategy. For example, fees for international stock funds are typically higher than fees for domestic stock funds, and actively managed fund fees are typically higher than passively managed (index) funds. An expense ratio is important to understand because it affects your return. It is deducted from the fund’s assets – total return is “net” of these fees. In other words, return is calculated after these fees have been deducted from the fund. This allows you to compare the performance of funds charging higher or lower fees.

Keep in mind that fees do not necessarily correlate with performance. If an investment fund has a high expense ratio, it may not mean that it has better performance. Some investment options also charge transaction fees or have restrictions on exchanges or withdrawals (such as a short-term redemption fee). It’s important to be aware of these fees and/or restrictions when you choose your investments. Drexel’s Retirement Plans Investment Committee meets quarterly to monitor the fees and performance associated with the fund options in the University’s 403(b) plans.